Insurers must not distinguish between men and women

Insurers must stop taking a person's sex into account when calculating insurance, an advisor to the European Court of Justice (ECJ) has said. Advocate General Juliane Kokott has said in an opinion that statistics showing different risks for the two sexes cannot justify different treatment of men and women because they do not demonstrate fundamental differences between the sexes. Women are often given cheaper life insurance because on average they live longer.

This is not sufficient grounds on which to justify an exception to the EU's rules on equality of the sexes, she said, "The exception in question does not relate to any clear biological differences between insured persons. On the contrary, it concerns cases in which different insurance risks can at most be associated statistically with gender. Differences in treatment could at most be justified by clearly demonstrable biological differences between the sexes.

Many other factors also play an important role in the evaluation of insurance risks. The life expectancy of insured persons is above all strongly influenced by the economic and social conditions of each individual, such as, for example, the kind and extent of the professional activity carried out, the family and social environment, eating habits, consumption of stimulants and/or drugs, leisure activities and sporting activities. It is legally inappropriate to link insurance risks to a person’s sex. Differences between people, which can be linked merely statistically to their sex, must not lead to different treatment of male and female insured persons when insurance products are developed."

EU law prohibits insurers from taking a person's sex into account when creating insurance products or setting premiums. There is an exception to that rule, though, in the EU's Equal Treatment Directive. Article 5(2) of the Directive says that countries can "permit proportionate differences in individuals' premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data".

If Kokott’s view is adopted by the European Court of Justice it would only apply to future policies and a transition period of three years should be implemented to ensure stability in the insurance sector. The opinions of Advocates General are only advice for judges at the ECJ, Europe's highest court, but are followed in around 80% of cases.

Insurance organizations across Europe have been quick to jump in with rather dubious warnings about insurance becoming more expensive and harder to get for everybody if the European court backs the judgement.

Kokott is effectively arguing that insurance companies are breaking EU law if they charge women lower/higher premiums than men because they pose a lower/higher risk. Insurers have always defended historic simplistic price differentiation by age and/or sex by using dated data –despite increasing evidence that both are only factors among a wide range of things that influence individual risk.